"The same phenomenon was found in Canada, where the three most prominent business families were all Jewish—the Belzbergs of Vancouver, the Bronfmans of Montreal and the Reichmanns of Toronto."

Source:
Edward S. Shapiro, 1992, "A Time For Healing: American Jewry After World War Two", p. 117

The Bronfmans' Leveraged Leviathan

By CLYDE H. FARNSWORTHPublished: May 24, 1992

Back in 1979 two of Canada's great dynastic business families seemed headed for a sensational confrontation. The Bronfman brothers, Edward and Peter -- they're the "other" Bronfmans, not the Seagram branch of the family -- and the Reichmann brothers, Paul, Albert and Ralph, coveted a real estate holding company called Trizec Corporation. Trizec was the company through which William Zeckendorf, the New York developer, assembled an impressive collection of Canadian properties.

The Bronfmans, intent on building a real estate empire, had taken a 37 percent stake in Trizec three years earlier. Then the Reichmanns, busy building their own empire, came along and snapped up a 35 percent stake. The looming collision over who would control Trizec promised to be as exciting as any plot a potboiler novelist might dream up.

But one day some of the Bronfmans' lieutenants bumped into Paul Reichmann in a hotel lobby. After a 10-minute chat, they discovered that the Reichmanns really only wanted Trizec as an investment. They were perfectly willing to let the Bronfmans continue running it.

Corporate Canada is, if anything, a vast web of interlocking companies owned by a handful of wealthy families -- the Bronfmans, Reichmanns and Belzbergs, for example. Typically, one family group takes stakes in the operations of another and puzzling out who owns what, and where profits and losses do or don't flow from, is akin to peeling away the layers of the proverbial onion.

So it was no surprise that the hotel-lobby conversation 13 years ago led to a partnership deal between the Bronfmans and the Reichmanns, a deal that still stands today. And it also is no surprise that the Edper Group, as the Bronfmans' holdings are called, is now under intense scrutiny because of the bankruptcy filing here 10 days ago by the Reichmanns' Olympia & York Developments Ltd.

The question now asked by investment bankers, stock analysts and executives across Canada is this: Are the Bronfmans next? The answer is as elusive as details of the workings of Edper and the Bronfmans, who, like the Reichmanns, are legendary for their secrecy.

Edper's Long Reach

Edper is about five times larger than Olympia & York and reaches even more deeply into Canada's economic life. There are linkages through not only their joint ownership of some assets, like Trizec, but also the tens of millions of dollars of loans made by Edper companies to Olympia & York. And the two groups do business in some of the same sectors, particularly real estate, which has been rattled deeply by the Reichmanns' troubles.

Edper is a sprawling conglomerate of 500 private companies and 40 public companies with 100,000 employees and assets of $100 billion (Canadian). By some estimates the publicly traded companies account for more than 10 percent of the the Toronto Stock Exchange's capitalization.Some of the jewels in the Edper crown: Canada's largest concerns in forest products (MacMillan Bloedel), mining (Noranda) and insurance (London Insurance); Canada's second-largest trust company (Royal Trust) and brewer (John Labatt), and such huge real estate operating companies as Trizec, which alone has assets of nearly $12 billion and owns 72 percent of Bramalea Ltd., itself a troubled real estate company with extensive United States holdings.

"I do think we'll come out whole," said Willard J. L'Heureux, 44, a lawyer and key strategist for the group. He runs Hees International Bancorp Inc., Edper's merchant bank. (The Bronfman brothers declined to be interviewed for this article.)

Today, Jews can be numbered among the wealthiest Canadians. They have begun slowly to penetrate those economic sectors that have hitherto been closed to them, at the same time as they are building up wealth in family-owned firms. In these days of global economic networks, the old Anglo-Canadian establishment may no longer be crucial to economic power. Families such as the Bronfmans, the Belzbergs, and the Reichmanns represent just the tip of an extremely affluent segment of Jewish society in Canada. Even as these wealthy Jews and their money begin to be accepted in Gentile high society, they often retain strong loyalties to and status within the Jewish community. Their commitments, typified by gala fund-raising dinners, are routinely chronicled in Jewish-Canadian publications.